Recent disasters likely affecting insurance costs
- Jadeson Ortega
- Mar 10
- 2 min read
Non-life insurance professionals are seeing possible higher prices of products, following stronger local and global natural disasters in recent months, including over five storms in the Philippines last year, the California wildfires and the Florida floods.
In a media briefing on Wednesday in Makati City, Malayan Insurance chief operating officer Denden Tesoro said there was a price increase of 10 to 15 percent in non-life insurance products in recent years.
Meanwhile, she said the price of reinsurance to non-life insurers has stabilized since 2023, after hitting a 50 percent growth.
Reinsurers cover the service costs of other various insurance firms so they can continue delivering claims to individual and corporate clients.
Insurance faces inflation, too
However, Philippine Insurers and Reinsurers Association executive director Michael Rellosa said further natural disasters due to climate change could force insurers to raise product prices.
“Philippine insurers deal only with top-notch global reinsurers and these reinsurers price their protection based on what’s happening around the globe, not just what’s happening here in the Philippines,” he said.
Tesoro shared that some insurers in the United States already closed shop as requests and amounts for claims surged due to property damage brought by hurricanes in Florida last year and wildfires in California in January.
Extra expenses threaten
She said insurers spend on claim adjusters who analyze whether the loss is indeed covered under the policy and how much. “So those are extra expenses that insurance companies have to pay,” Tesoro said.
Due to the massive impact of two Florida hurricanes last year, the former administration under US President Joe Biden announced it allocated at least $94 million to recovery efforts for the victims.
On the California wildfires, BBC reported a land area spanning over 23,000 acres was burned and more than 400 families evacuated.
Environmentalists worry that dry and wet weather conditions might intensify as the European Commission reported an increase of 1.48 degrees Celsius in global temperature in 2023 or near the 1.5 limit set by state signatories to the United Nations’ Paris Agreement on Climate Change.
However, Rellosa stressed that the disasters in the US have not yet affected the prices of non-life insurance in the Philippines.
Tesoro added that putting a number for a price increase forecast in the non-life insurance industry is difficult as insurers work with different reinsurers and ways of analyzing risks.
“So there could be some differentiation in terms of price, even if you say they’re generally expensive, and companies also have different underwriting views,” she said.
Rellosa said adjustments to reinsurance rates will be announced in April and July.
Source: tribune.net.ph
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